Premium Company provides the following ABC costing information: The above activi
ID: 2467180 • Letter: P
Question
Premium Company provides the following ABC costing information: The above activities are used by Departments A and B as follows: How much of the account inquiry cost will be assigned to Department A? $50,000 $200,000 $60,000 $80,000 How much of the account billing cost will be assigned to Department B? $8,500 $8,250 $8,750 $8,540 How much of account verification costs will be assigned to Department A? How much of correspondence costs will be assigned to Department A? How much of the total costs will be assigned to Department A?Explanation / Answer
Premium Company 7 How much of the account enquiry cost will be assigned to Department A Answer = A $ 50,000 Explanation = $ 200,000 / 10,000 hours x 2,500 hours = $ 50,000 8 How much of the account billing cost will be assigned to Department B Answer = C $ 8,750 Explanation = $ 140,000 / 4,000,000 lines x 250,000 lines = $ 8,750 9 How much of the account verification cost will be assigned to Department A Answer = B $ 18,750 Explanation = $ 75,000 / 40,000 hours x 10,000 accounts = $ 18,750 10 How much of the account correspondance cost will be assigned to Department A Answer = C $ 7,500 Explanation = $ 25,000 / 4000 letters x 1,200 letters = $ 7,500 11 How much of the total cost will be assigned to Department A Account enquiry costs = $ 50,000 Account billing costs = $ 14,000 ($ 140,000 / 4,000,000 lines x 400,000 lines) Account Verification costs = $ 18,750 Correspondance costs = $ 7,500 Total costs $ 90,250